Flying High | The Perryman Group

Flying High

By: Dr. M. Ray Perryman
Published in syndication February 15, 2023

It's been about three years since COVID-19 and measures taken to slow its spread brought the world to a screeching halt. One of the hardest hit industries was airlines. The numbers of travelers through TSA checkpoints fell from over two million most days in February 2020 to fewer than 100,000 per day through part of April (a drop of more than 95%).

Even with government infusions to keep the system intact, the financial losses were massive. Airlines and all travel-related industries were left with the same (or even higher) fixed expenses and almost no revenue. Companies were forced to lay off workers. Investments were delayed, and expenses were slashed to try to stay afloat.

Through most of 2020, passenger volumes remained a fraction of what they had been, though they began to edge up from the April 2020 lows. Many restrictions remained in place, and some people were naturally reluctant to travel even where it was officially allowed.

When things began to somewhat normalize, travel trended upward. The level of pent-up demand was high, and trips canceled during the pandemic were rescheduled. At the same time, people had money to spend, with several federal stimulus packages sending cash payments to much of the US population plus savings due to not being able to venture out and do things during the shutdowns. Restrictions were eased over time, with significant variations by country hampering recovery in international traveler levels.

The most recent numbers of passengers through TSA checkpoints indicates that the pre-pandemic levels are being reached on some days, though averages aren't quite there yet. The total available capacity on US airlines is well below pre-pandemic levels, with schedules pared down. Ticket prices are relatively high and are likely to remain so, with fuel cost being a significant culprit.

The global air travel industry is projected to finally return to profitability this year. North America is expected to lead the way, with other areas hampered by issues such as the slower pace of China's reopening. Industry experts indicate that many of the worst problems with high-profile meltdowns, cancellations, long lines, and other issues are likely behind us. (Let's hope so!) The inability to invest in technology and upgrades through the pandemic years, however, could continue to cause issues (and, of course, there is always the threat of weather disruptions).

Going forward, one of the biggest challenges will be labor shortages. It's an economywide problem, and even though air travel industry involves high average wages, it will still be difficult to find enough workers (including pilots, which are among the most highly trained professionals anywhere). It will take time to fully recover, but things are looking up, up, and away! Stay safe!